Patrick, J; Bright, S; Janda, KB; (2018) Energy upgrades in commercial property: Minimum energy efficiency standards, compliance pathways, and leases in the UK. In: Wilkinson, S and Miller, N and Dixon, T and Sayce, S, (eds.) Routledge Handbook of Sustainable Real Estate. (pp. 37-54). Routledge: London, UK.

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Abstract

Improving the energy performance of the commercial built environment presents significant opportunities for meeting the UK’s carbon reduction targets, but also significant challenges, particularly where space is rented. The UK government has passed Regulations introducing statutory minimum energy efficiency standards (MEES) designed both to tackle the split incentive and to provide a regulatory impetus to make improvements for the most energy inefficient rented buildings. These will prohibit the letting of sub-standard properties from April 2018 unless an exemption applies. This chapter explores the interaction between MEES and leases, and potential effects for energy efficiency upgrades. Drawing on industry interviews and document analysis from the UK-based ‘WICKED’ project, it defines three approaches - active, protective, and avoidant - in managing compliance with the MEES Regulations, and looks at the role of leases within these approaches. While the active and protective approaches are in keeping with the intended effects of the Regulations, the avoidant approach could exacerbate tenant/landlord tensions and create a secondary market in sub-standard properties.

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